Sports Betting From the Dorms
Explosion of online wagering is a concern to lawmakers and NCAA tournament officials.
"March Madness" is Matt Reese's favorite time of year. Not only does he love to watch college basketball, but the NCAA men's basketball tournament gives the George Washington University junior plenty of chances to win big by betting on a few of the games.
But Mr. Reese doesn't travel to Las Vegas to bet, and he doesn't use a bookie. Instead, he simply turns on his computer, logs on to the Internet, and gambles from his dorm room.
"It's all pretty easy," says Reese. "I just look at the point spread, pick my teams, and give this company called World Sports Exchange my credit card number. My winnings are then wired to my bank account."
Reese isn't alone. Americans will bet more than $600 million in cyberspace this year.
That's up from $60 million two years ago. In 1996, there were two online gambling sites handling sports; now there are 50.
As the popularity of Internet sports gambling has grown recently, the pressure to regulate it has increased accordingly. While supporters maintain that it is legal to run such a service if it is licensed in another country, critics worry that its convenience could entice a whole new wave of people to gambling - at great social cost. The conflict is working it way to the highest levels of United States government as lawmakers attempt clarify the laws and penalties that apply.
US authorities say Internet gambling is illegal no matter where the company is based. "The Wire Communications Act bans the use of US telephone lines to run an interstate or foreign gambling operation," says Sen. Jon Kyl (R) of Arizona.
But it doesn't explicitly forbid Internet gambling - it only forbids the use of telephone wires for gambling. And as the Internet moves onto fiber-optic and satellite networks in the future, the Wire Communications Act will become obsolete.
For that reason, Senator Kyl has introduced a bill that would broaden the existing laws to extend the prohibition to all betting on the Internet. Penalties would range from six months in prison and a $2,500 fine for cybergamblers to four years in prison and a $20,000 fine for Internet bookmakers.
A broad coalition of organizations including the NCAA, casino operators, and the Christian Coalition have backed the bill, in addition to the the FBI, the State Department, and the White House.
Most of the concern over Internet gambling centers around the notion that easy access could accelerate gambling addiction. "By placing gambling in the home, the Internet will multiply addiction exponentially," says Bernard Horn, director of political affairs of the National Coalition Against Gambling Expansion. "Generally, the social and economic costs of gambling on the Internet far outweigh the economic benefits. Those costs include addiction, bankruptcy, and crime."
Law-enforcement officials also complain of the "instantaneous access" of online services and say they act as a powerful lure to potential bettors who can bet and lose large amounts of money without ever leaving home. The NCAA is particularly concerned about Internet gambling because computer literacy and access are so high among college students.
Even lawyer Robert Katzberg, who represents a co-owner of World Sports Exchange in Antigua, acknowledges the ease of placing a bet. "You no longer have to put on a stupid Hawaiian shirt and go to Las Vegas. The casino is now on your desk."
But supporters of cybergambling are confident that they will win in court and that this form of gambling will see explosive growth during the next decade.
"Simply because a computer Web site makes this available to people in the US, does not give the US jurisdiction over them," says Mr. Katzberg.
In Antigua, where sports gambling is legal, 26 sites have already been licensed. Internet sports books must pay an annual licensing fee of between $50,000 and $75,000, undergo rigorous personal and credit investigations, and post bonds to ensure they can pay off the winners.
"The reputable sites are regulated by governments around the world," says Sue Schneider, chairman of the Interactive Gaming Council. "I don't see why the US feels it must be the world's policeman."
Still, most Internet sports gambling operators say they would welcome US regulation. This, they reason, would end the questions over jurisdiction and quiet state attorneys general. As a middle-ground approach, Rep. Bob Goodlatte (R) of Virginia has introduced a bill in the House that aims only to regulate and tax the industry.
Whatever Congress does, it won't come soon enough for the NCAA. For the first time, Nevada bookmakers are expected to handle more total wagering - about $80 million - on the NCAA men's basketball tournament than the Super Bowl. And that doesn't include amounts wagered illegally over the Net.
"Internet gambling threatens to undermine the integrity of sports contests while jeopardizing the student athlete and the intercollegiate athletics community," says NCAA executive director Cedric Dempsey.
But as Reese prepares to wager online for this weekend's Final Four, he laughs at that description. "Hey, it's fun, it's not hurting anybody, and I'm having a much better tournament than George Washington did."